With mass layoffs, high energy prices and record-high inflation still putting pressure on household budgets, now is the time to adopt good money habits. Good habits can help you build financial confidence and save more.
For example, keeping a journal of your expenses, such as by hand with pencil and paper, or using a spreadsheet program or app tool can help you identify areas for savings.
1. Set a Budget
Creating a budget is one of the most important money habits you can adopt as a freelance writer. It helps you identify your spending habits and make sure that the dollars coming in match the ones going out.
Start by determining your NET income (that’s your total take-home pay, after payroll deductions for taxes, savings, health and life insurance). Then identify your fixed expenses, which are things that typically remain the same amount each month, like rent or a mortgage, cell phone, trash and utilities. Lastly, determine your variable expenses which are things that vary monthly, such as food, entertainment and gifts.
Once you’ve figured out your expenses, set aside 50% for needs and 30% for wants. Then commit 20% of your income to saving and debt repayment. Finally, track your spending on a regular basis and check in with your budget to ensure it is still accurate.
2. Keep a Journal
Keeping a journal is one of the best ways to keep track of your goals and work progress. It also helps you identify negative thought patterns that can cause stress and prevent you from achieving success as a freelance writer.
Impulse spending is a bad money habit that can wreak havoc on your budget and sabotage your financial goals. Try to avoid impulsive shopping by practicing the 24- hour rule or establishing a savings goal before making any purchases.
Another good habit to adopt is balancing your checkbook. This practice can help you see how your money is being spent and stop you from accidentally overdrafting your account. It’s also a good idea to review your bills each month and make sure all the line items on your statement are accurate. Make a habit of cutting out unnecessary expenses like morning coffees, lunches out, and that bag of beef jerky to save more money.
3. Set a Savings Goal
It’s important to save at least 20% of your income each month. This way, you’ll have money set aside for emergencies and retirement.
It may be hard to save for the future when you’re just starting out, but it’s essential
to do so. It will help you avoid going into debt and prevent you from living paycheck to paycheck.
Instead of relying on credit cards, try paying with cash or a debit card. This will help you get in the habit of only spending money that you have.
If you’re tempted to shop, remember that the dopamine released from shopping is short-lived. It’s not worth racking up expensive debt or making unnecessary purchases! Instead, save for a new car, a vacation, or even to quit your job. You’ll thank yourself later for being able to afford those goals! Investing is another great way to build wealth.
4. Invest in Yourself
It’s a popular myth that starting an Internet or freelance business doesn’t cost anything, but there is an investment of time and money needed to make these businesses thrive. Whether it’s paying for a website hosting service or getting a book like Chris Guillebeau’s $100 Startup, ramping up a new business takes cash.
Another great way to invest in yourself is by shopping less, especially for status items. Impulse purchases can quickly rack up debt and make it hard to get out of it.
Keeping a close eye on your spending habits is also important and can be accomplished by using a budgeting app or setting aside an hour each week to review your finances. You can even automate your bills and savings accounts to simplify record keeping, making it easy to maintain these good money habits. Lastly, by building a network of fellow writers, you can find more work and grow your earning potential.
5. Keep a Separate Account for Your Freelance Business
As a freelance writer, managing your money can feel complicated. From learning how to budget to saving for taxes and retirement (outside of your employer 401k), the financial side of freelancing can be overwhelming.
A common mistake is combining your personal and business expenses in one bank account. This can be a trap that leads to overspending or forgetting about important expenses like software or subscription fees. It can also lead to trouble come tax time or an audit.
Creating a separate account makes it easier to track your freelance income and expenses. This is a simple but important step that can help you build good money habits and set yourself up for financial success.
6. Track Your Progress
Putting your financial goals in writing helps transform them from abstract ideas into tangible targets. This will help keep you motivated to achieve those goals. Something simple like protecting your investment of appliances can be easily ignored. If you need more information, https://www.cinchhomeservices.com/faq-library/-/faq/how-to-clean-a-microwave can be a good resource for more education on things like a home warranty.
Setting aside weekly finance time is one of the simplest ways to begin building good money habits. It gives your financial life the space and time it needs to improve.
During your weekly finance time, you can work on things like cleaning up your online accounts or setting up a budget spreadsheet.
You can also use this time to cut unnecessary expenses that add up each month. These could include subscriptions, cable TV, or even food supplies. Getting rid of these expenses will free up some money each month that you can then save or put towards other goals. Ultimately, it’s about making small changes that will lead to big results over time. And remember, the more you practice these habits, the more you will become accustomed to them.
